Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q1 2022 Earnings Presentation
22 slides from Cf Industries's earnings presentation, May 5, 2022
Slide 1: 2022 First Quarter Financial Results
2022 First Quarter Financial Results May 4, 2022 NYSE: CF
Slide 2: Safe harbor statement
2 Safe harbor statement All statements in this presentation by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other th an those relating to historical facts, are forward - looking statements. Forward - looking statements can generally be identified by their use of term
Slide 3: Note regarding non-GAAP financial measures
3 Note regarding non - GAAP financial measures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that EBITDA, adjusted EBITDA, free cash flow, and free cash flow yield, which are non - GAAP financial measures, provi
Slide 4: First quarter 2022 highlights
4 First quarter 2022 highlights (1) See appendix for reconciliation of EBITDA and adjusted EBITDA (2) Represents cash provided by operating activities (cash from operations) less capital expenditures less distributions to nonco ntr olling interest; see appendix for reconciliation of free cash flow E
Slide 5: Executing on projects to support global transition to clean energy economy
5 Executing on projects to support global transition to clean energy economy 2020 2021 2022 2023 2024 Announced commitment to clean energy economy focused on green and blue ammonia production and carbon reduction goals - Reduce total CO 2 equivalent emissions by 25% per ton of product by 2030 (2015
Slide 6: CF North America ammonia capacity utilization advantage
6 (1) Data taken from the December 17, 2021 CRU Ammonia Database (2) Represents CF Industries’ historical North American production and CRU’s capacity estimates for CF Industries (3) Calculated by removing CF Industries’ annual reported production and capacity from the CRU data for all North America
Slide 7: Financial results – first quarter 2022
7 Financial results – first quarter 2022 I n millions, except percentages, per MMBtu and EPS Q1 20 22 Q1 2021 Net sales $ 2,868 $ 1,048 Gross margin 1,698 289 - As percent age of net sales 59.2 % 27.6 % Net earnings attributable to common stockholders $ 883 $ 151 Net earnings p er diluted share 4.21
Slide 8: Strong global nitrogen outlook
8 Strong global nitrogen outlook Global supply and demand Regional nitrogen dynamics Global energy differentials While producers in low - cost regions appear to be operating at high rates in 2022, global nitrogen supply continues to be limited by curtailments in Europe/Asia due to high energy prices
Slide 9: Decade-low stocks-to-use ratio drives higher grain values
9 Decade - l ow stocks - to - use ratio drives higher grain values, expected to require at least two more years to replenish (1) Crop futures prices represent Marketing Y ear ( September – August) average daily settlement of the front month future contracts for 2010/11 through 2020/21; 2021/22 repre
Slide 10: Corn, soybean & wheat returns are well above five-year average
10 Corn, soybean & wheat returns are well - above five - year average Source: USDA Commodity Costs and Returns (May 2, 2022), CME Group, CF Analysis $0 $100 $200 $300 $400 $500 $600 $700 2017 2018 2019 2020 2021 2022F Corn Soybeans Wheat Estimated Returns over Variable and Land Cost, by Crop $/acre
Slide 11: Russia/Ukraine highly impactful in global agricultural and fertilizer supply and trade
11 0 5 10 15 20 25 Merch. Ammonia Urea AN UAN Exports Domestic Production Spare Capacity Russia/Ukraine highly impactful in global agricultural and fertilizer supply and trade Russia/Ukraine Crop Production/ Exports Million Metric Tons, 2018 - 2020 3 year - average Russia Nitrogen Supply and Exports
Slide 12: Sharply higher natural gas prices in Europe and Asia have widened spreads
12 Sharply higher natural gas prices in Europe and Asia have widened spreads to North American benchmark prices Global Energy Price 2019 - 2022F USD/ tonne North American Production Margin Advantage (1) 0 5 10 15 20 25 30 35 40 45 2019 2020 2021 2022 Henry Hub natural gas TTF natural gas Chinese ant
Slide 13: India and Brazil have consistent long-term demand growth
13 India and Brazil have consistent long - term demand growth, which has led to rising import demand (1) Brazil domestic production in 2020 is comprised solely of 2019 inventory carryover Source: CRU Urea Market Forecast as of February 16, 2022, India DOF, FAI, Trade Data Monitor, industry publicati
Slide 14: Capital management
14 Capital management Capital structure and allocation Clean energy initiatives Capital expenditures CF Industries’ Board of Directors declared a quarterly dividend of $0.40 per common share, a 33% increase over the previous dividend Repurchased ~ 1.3 million shares in 1Q 2022 for $100 million under
Slide 15: Nitrogen production and share count history
15 2.6 6.0 (1) 6.0 6.1 6.6 (2) 6.6 7.0 (3) 8.1 (4) 8.1 8.2 (5) 8.2 8.2 8.2 8.2 All N production numbers based on year end figures per 10 - K filings. (1) Beginning in 2010 includes capacity from Terra Industries acquisition (2) Beginning in 2013 includes incremental 34% of Medicine Hat production to
Slide 16: Free cash flow and shares outstanding
16 Free Cash Flow (millions) CF Industries’ Free Cash Flow and Shares Outstanding as of Year - end and Quarter - end Shar es Outstanding (millions) 0 50 100 150 200 250 300 350 400 -$2,000 -$1,500 -$1,000 -$500 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2009 2010 2011 2012 2013 2014 2015 2016
Slide 17: Equity appears undervalued given high free cash flow yield
17 14.2 9.8 8.7 8.6 6.0 5.6 2017 2018 2019 2020 2021 Q1 2022 LTM 2017 - 2021 average ratio EV/Adj. EBITDA (2)(3) Equity appears undervalued given high free cash flow yield 10.3% 9.7% 8.9% 9.0% 14.7% 13.0% 2017 2018 2019 2020 2021 Q1 2022 LTM 2017 - 2021 average yield Free Cash Flow Yield (1) (1) Rep
Slide 18: CF Industries EBITDA sensitivity table
18 CF Industries EBITDA sensitivity table Table illustrates the CF Industries business model across a broad range of industry conditions $50/ton urea realized movement implies ~$750M change in EBITDA on an annual basis (1) Based on 2019 sales volumes of approximately 19.5 million product tons, 2019
Slide 19: Appendix
Appendix
Slide 20: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA
20 Non - GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA (1) Loan fee amortization is included in both interest expense – net and depreciation and amortization (2) Represents expense incurred due to the deferral of certain plant turnaround activities as a result of the COVID - 19
Slide 21: Non-GAAP: reconciliation of net earnings to EBITDA, continued
21 Non - GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA, continued (1) For the year ended December 31, 2019, amount relates only to CF Industries Nitrogen, LLC (CFN). For the years ended December 31, 2018, and 2017 , amount includes CFN and Terra Nitrogen Company, L.P. (TNCLP), a
Slide 22: Non-GAAP: reconciliation of cash from operations to free cash flow
22 Non - GAAP: reconciliation of cash from operations to free cash flow and free cash flow yield In millions , except percentages , share price, and ratios FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Q1 2022 LTM Cash provided by operating activities $ 1,631 $ 1,497 $ 1,505 $ 1,231 $ 2,873 $ 3,686 C apit
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